ICICI Bank 2007 Annual Report Download - page 6

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Letter from the Managing Director & CEO
Dear Stakeholders,
India continues on its path of high economic growth, drawing on
the strong foundation of economic activity in the country. This
is reflected in our economic performance during fiscal 2007, a
year which was marked by increases in domestic inflation, asset
prices and both domestic and international interest rates. Our
GDP growth rate is estimated to have been at 9% and above for
the second year in succession - no mean achievement, and a
testimony to the impact of 15 years of economic reform.
Our movement to a high growth trajectory has been propelled
by the knowledge economy, which has established a completely
new growth paradigm in India. Knowledge sublimates the
entire process of wealth creation by directly leveraging human
capital. This is now extending from information technology and
related services to financial services, healthcare, analytics,
engineering, design and other similar knowledge-based sectors.
The development of a knowledge-centric and people-centric
economy not only generates direct employment, but also has
a multiplier effect on various sectors of our economy given
the boost it gives to retail, infrastructure, real estate and other
sectors. The only challenge is to equip our young people with
skills relevant to this new economic reality, so that our unique
demographic advantage is fully realized.
The explosive growth of the knowledge economy and the
favourable demographic profile continue to drive consumption
demand. This will lead to a market for a wide range of financial
products and services for consumers - a mortgage to finance a
house; a loan for a car; a credit card for ongoing purchases; a
bank account; a long-term investment plan to finance a child’s
higher education; a pension plan for retirement; a life insurance
policy, and many others. The increase in incomes leads to higher
demand not only for financial and other services, but also for
manufactured goods, thereby spurring increased manufacturing
activity as companies step up production to meet the growing
demand. Already we are in a position where companies are
operating at near peak capacities and sustained demand
growth will require a rapid build up of production capacities and
infrastructure. Power, airports and ports, urban rejuvenation and
rural infrastructure are all areas where infrastructure investment
will scale up rapidly over the next few years. Our estimates
show that by 2010 over US$ 500 billion of investments would
be required to fund capacity expansion and infrastructure
building. These domestic growth trends combined with the
global expansion of Indian businesses present a diverse range
of growth opportunities for the financial sector.
The ICICI Group is well positioned to participate in and contribute
to this process. We were among the first to recognise the
opportunity presented by the retail market and are today
positioned as market leaders across the spectrum of retail